Triangle Drug Company Specializes in Side-Effects of Cancer Therapy

Jan. 29--MORRISVILLE -- Like a marriage with children, the
Triangle’s newest health care company is out of the starting
gate with two market-ready cancer drugs and a third on the way.

Vestiq Pharmaceuticals made its public debut this month with a
risk-aversive business model designed to eliminate the lottery
factor in the pharmaceutical field.

Rather than assign scientists to toil in laboratories and
lawyers to grind it out in regulatory proceedings, the Morrisville
company essentially functions as a marketing and lobbying
organization for new niche drugs.

Vestiq gets involved only at the point when a drug is approved
for safe use by the U.S. Food and Drug Administration, but yet not
widely accepted by doctors, pharmacies and insurance companies.
Getting approved meds into circulation can be labor intensive,
requiring scores of sales pitches and clinical presentations across
the country.

Betting on overlooked or obscure medications is an option for
smaller, underfunded companies to establish themselves. "I would
not call it a dominant model but an emerging model," said Steve
Stefano, managing partner at Cary-based Synopia Rx, one of
Vestiq’s partners. "If a company like Vestiq can put 50 or
100 sales reps behind a product, it can reflect the sales curve
upwards."

Earlier this month Vestiq announced its formation, after Baum
and other pharmaceutical veterans spent more than a year lining up
all the pieces.

The terms of Vestiq’s business deals are confidential
except a marketing alliance in which Vestiq will pay $44 million
over four years to market Oravig, an oral tablet placed under the
lip to treat mouth sores caused by radiation therapy.

Vestiq’s other product, Zuplenz, is a dissolvable tongue
strip that treats nausea and vomiting caused by radiation,
chemotherapy and surgery.

Both are known treatments in pill form, but Vestiq’s
versions have new delivery mechanisms.

In addition to its two drugs Vestiq’s components include
the stock acquisition of Cary-based Praelia Pharmaceuticals for its
regulatory registrations and established processes. Vestiq also has
marketing and contracting deals with Synopia Rx and Vanguard
Pharmaceuticals in New Jersey.

Vanguard supplies the national 44-member sales team to get
Vestiq’s drugs into doctors’ offices.

Synopia Rx specializes in securing insurance coverage for drugs.
Stefano said Vestiq’s products are typically covered by
insurers as Tier III medications with higher co-pays, ranging from
$40 to $70 per vial or package. Synopia Rx tries to get the
insurers to reclassify the meds under Tier II, which have lower
co-pays, typically around $15, making them more likely to be
prescribed to patients.

Synopia Rx works with about 50 insurance companies that
collectively represent about 80 percent of patients who have
insurance, Stefano said. Promoting a drug with those insurers can
take about 9 months per medication, he said.

Baum said every new drug faces this challenge: "If it’s a
new product, doctors ask two questions: Is it stocked in my local
pharmacies? And is it reimbursed by insurance companies in my
area?"

Blue Cross and Blue Shield of North Carolina, the state’s
biggest insurer, has covered Oravig and Zuplenz since the were
approved by the FDA in 2010. Blue Cross classifies the medications
as Tier III, said spokesman Lew Borman.

As a policy, Blue Cross and Blue Shield classifies drugs as Tier
III if they do not significantly differ from other available drugs.
Tier II is reserved for preferred, brand-name drugs, while Tier I
is for cheap generics.

Baum said he expects Synopia Rx to meet with Blue Cross and
other insurers this year to press the case that Oravig and Zuplenz
are substantially different from comparable treatments and should
be considered Tier II drugs.

Baum said that the company is funded by its principals and angel
investors, but is looking for additional sources of capital. Baum
is a Triangle pharmaceutical veteran who paid his dues at Merrell
Dow Pharmaceuticals and GlaxoSmithKline before helping start three
smaller companies.

"We’re rifle-focused, let’s put it that way," Baum
said. "We will not stray from our strategy."